JPMorgan Chase is increasing its issuance of jumbo MBS backed by loans with relatively high LTV ratios. Meanwhile, Flagstar Bank is contributing loans to a jumbo MBS from Goldman Sachs.
Issuance of expanded-credit MBS is set for a strong start in the third quarter. Presale reports for eight deals were published in the past two weeks, including the second-largest post-crisis issuance.
The rating service will continue to take a relatively harsh view of mortgages underwritten with alternative documentation even though they have per-formed better than expected.
Issuance of prime non-agency MBS declined in the second quarter on a sequential basis, led by a drop in the volume of GSE-eligible loans going into the non-agency market. Only a handful of issuers were active in the second quarter.
The firm is set to issue another non-agency MBS with proprietary reverse mortgages. In a change from its previous deal, some of the loans are “inactive.”
Issuance of MBS backed by fix-and-flip loans is outpacing that of last year, though the market remains small. The largest issuer in the space received a significant investment from KKR.
The company is set to issue the first post-crisis non-agency MBS stocked entirely with home-equity lines of credit. Fitch assigned preliminary AAA ratings to the deal.
Investors in non-agency MBS face increased risks from GSE-eligible mortgages according to Moody's. The loans are allowed to have relatively high DTI ratios while still receiving QM status.
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